Suning chairman Zhang Jindong is partnering with China’s biggest developers
Chinese retailer Suning.com is setting up a RMB 20 billion ($3 billion) joint venture with Evergrande Real Estate Group to develop commercial plazas to promote its smart retail services. The retailer will invest RMB 9.8 billion for a 49 percent stake in the partnership while Evergrande, the mainland’s second-largest developer by sales, will take the remaining 51 percent stake by injecting RMB 10.2 billion.
The joint venture, named Shenzhen Hengning Commercial Development (深圳市恒宁商业发展有限公司), aims to develop and operate Suning.com Plazas (苏宁易购广场), according to a statement posted on Shenzhen Stock Exchange last Friday. The joint venture will focus on developing shopping malls for Suning and will not engage in any other real estate businesses.
Evergrande to Help Suning’s Smart Malls
Suning opted to pursue the joint venture with Evergrande after struggling to secure quality projects and raise sufficient capital in a quest to develop its own shopping centre portfolio.
“In order to solve the problems faced in the process of plaza development, the company plans to cooperate with a property developer with both national and regional dominance to achieve the realisation of Suning.com Plaza,” the company said in the statement.
A Suning.com Plaza in Nanjing
The joint venture will help Suning achieve its goal of having 300 plazas by 2020, which was announced last December in a press conference attended by the bosses of Evergrande and commercial developer Dalian Wanda Group. Targeting new areas of first- and second-tier cities, the retailer had developed over 20 plazas, mostly in Nanjing, Wuxi, Zhenjiang, Fuzhou and Taiyuan by the end of 2016, according to local media reports.
The Suning.com Plaza chain aims to feature smart retail technologies including facial recognition, big data and augmented reality. Plans call for Suning’s members to be able to check in at the stores with their faces, in return for exclusive discounts, while the retailer will analyse data generated by customers’ movement in the stores, payment history and buying behaviour. Shoppers can also make payments simply by having their car plates scanned when exiting the malls.
Suning Befriends Top Developers
Suning’s latest partnership with Evergrande came just two months after it inked an agreement with rival property giant Country Garden in April, under which Suning will open 600 stores in Country Garden’s properties this year.
In addition to partnering with Evergrande and Country Garden, the retailer may soon count Wang Jianlin’s Wanda as its next partner. In Suning’s press conference last December, Wang said that his company would “cooperate with Suning comprehensively” in 2018, though the duo had not signed any contracts yet at that time.
In late January, Suning joined a consortium that bought a 14 percent stake in Dalian Wanda Commercial Properties, Wanda’s flagship commercial property arm, for RMB 34 billion ($5.37 billion). Wang presented the deal as a part of a transformation of the company, which has a portfolio of nearly 240 shopping centres across China, from a real estate developer into a commercial management firm focussed on integrating online and offline retail.
Where did they get the money from? I have never seen more than two shoppers in a Suning store. They don’t even sell cell phone chargers in the cell phone department. I guess they are gambling their last 20bil on this before they go belly up.